A new study says telehealth increased health costs. Here are 5 reasons you should be skeptical.

By Tracy Walsh, Consultant, Population Health Advisor

A new study published Monday in Health Affairs cuts against the conventional wisdom on one of the biggest trends in health care: the increased use of direct-to-consumer telehealth services.

The study found that while these services increase patients' access to care, they also may increase overall health care spending—contrary to the widespread expectation that direct-to-consumer telehealth would cut costs.

But if you dig a little deeper, you'll find the study's takeaways aren't nearly as clear as they may seem.

About the study

The researchers examined 2011-2013 commercial claims data on health care spending related to acute respiratory illnesses for more than 300,000 patients with a plan offered by the California Public Employees Retirement System, which began offering telehealth service provided by Teladoc to certain enrollees in 2012.

They found that health care spending was lower on a per-episode basis with direct-to-consumer telehealth visits—but that "the convenience of telehealth led to greater use of care and therefore increased health care spending."

Specifically, the study found that 88 percent of direct-to-consumer telehealth visits represented new utilization, and that annual spending on acute respiratory illness grew by $45 per telehealth user.

Why you should be skeptical

The findings may come as a surprise, as direct-to-consumer telehealth has been championed as a potential way to cut costs. But I'm skeptical of the study's findings—and how generalizable they might be—because of several major limitations to its research methodology.

1. The study's definition of direct-to-consumer telehealth isn't the industry standard.

The study used Teladoc's definition of direct-to-consumer telehealth, which includes interactions by telephone. But most state policies, industry groups, and other vendors exclude phone conversations from their definition of "telehealth"—in part because there is limited reimbursement for this type of service, and in part because phone calls are often viewed as a standard complement to patient care rather than a discrete clinical encounter.

This means the study findings aren't necessarily representative of real-time, audiovisual direct-to-consumer virtual visits.

2. The analysis fails to account for the majority of services delivered via direct-to-consumer platforms.

As the study authors note, respiratory infections are the most common types of conditions for which consumers seek direct-to-consumer telehealth services.

However, a 2014 study across several direct-to-consumer telehealth vendors found that these conditions only make up approximately one quarter of conditions treated using telehealth (other common conditions include cold, flu, pertussis, UTIs, eye infections, and skin inflammation). Again, this would suggest the study may not be generalizable to direct-to-consumer services as a whole.

3. The study didn't assess utilization at urgent care centers.

The new Heath Affairs study evaluated utilization only across telehealth visits, physician office visits, and the emergency department. But a 2014 study by Dale Yamamoto found that many telehealth users (46 percent) self-reported that they would have redirected their visit to urgent care services had telehealth not been available. The authors of the Health Affairs study failed to account for the higher costs associated with this care setting.

4. The authors made questionable assumptions about the duration of telehealth visits.

The authors stated, "Since we did not have time estimates directly related to telehealth, we assumed that the time spent on a telehealth visit was the same as the clinic time for the average visit, so that the only time saved was travel time." This is not in line with our conversations with members, which have found that direct-to-consumer visits can increase provider efficiency by up to 40 percent.

5. The study is subject to a high degree of selection bias.

The analysis was based on a patient population with "generous commercial insurance," which may not be reflective of patient utilization patterns for those enrolled in high deductible health plans or Medicare and Medicaid plans.

How providers should respond

Despite these limitations, the study tackles an important question that many provider organizations are struggling to answer: Does direct-to-consumer telehealth tend to substitute or supplement in-person care? This question historically hasn't been answered by the academic and industry research, which has made it difficult for providers to quantify the opportunity for investing in these new technologies.

But amid the uncertainty, there are clear steps providers can take right now to understand their direct-to-consumer telehealth market and make well-informed investments. To learn more, join me for a webconference on Tuesday, April 25. I'll share the latest updates on the state of the telehealth market, offer guidance on common planning pitfalls to avoid, and describe how leading provider organizations have achieved success using virtual care delivery platforms.

Register now


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